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ASX & TSX: WSA
WEST PERTH, Western Australia, March 15 /CNW/ - The Board of Western
Areas NL is pleased to announce the Company has executed an Option Agreement
to acquire 100% interest in a strategic holding of mining claims (the "Dunlop
Claims") at one of Canada's premier nickel, copper and cobalt mining camps,
Lynn Lake. The agreement also includes a group of claims which cover a
significant Volcanogenic Massive Sulphide ("VMS") zinc rich deposit
(8.8% zinc) at McBride Lake, 70km east of Lynn Lake.
Lynn Lake is one of Canada's largest historic nickel, copper and cobalt
producers. Between 1953 and 1976, Sherritt-Gordon Mines Limited operated
several underground mines before closing at a time of low nickel prices.
Sherritt-Gordon mined approximately 21 million tons of ore at an average grade
of 1% nickel and 0.5% copper, producing concentrates containing a total of
approximately 166,100 tonnes nickel, 94,800 tonnes copper and 1,700 tonnes
Importantly, the Dunlop Claims cover Sherritt-Gordon's highest grade mine
at Lynn Lake, the 'EL' mine which produced approximately 1.0 million tons ore
grading 3.3% nickel, 1.1% copper and an unrecorded amount of high grade cobalt
to 270m depth. The potential for extensions to the EL mine will be one of
Western Areas first priorities. In addition, there are a number of other
immediate drilling targets. These include untested airborne EM anomalies
directly north of the EL mine and on the Dunlop Claims east of the
The Option Agreement is consistent with Western Area's strategy to
acquire interests in advanced nickel projects which have potential to be
brought into production at an early date. The Company already owns 13.9%
interest in Canadian listed Mustang Minerals Corp. with an option to increase
this interest to 19.9%. Mustang is currently undertaking a pre-feasibility
study for an open pit mine at the Maskwa nickel deposit in southern Manitoba.
Lynn Lake is located in northern Manitoba, 320 km by road north west of
the nickel smelter at Thompson. The township of Lynn Lake has a population of
800 residents, with significant infrastructure including an airport. Manitoba
actively encourages mining activity and was recently rated by the Fraser
Institute as the best location in the world for developing a mine.
The Dunlop Claims are adjacent to an area held by Canadian listed company
Independent Nickel Corp. Independent Nickel recently announced an Indicated
Mineral Resource of 16.1 million tons grading 0.7% nickel and 0.4% copper plus
an Inferred Mineral Resource of 4.6 million tons grading 0.6% nickel and
0.3% copper in the area of the Sherritt-Gordon mines.
Western Areas Managing Director, Mr Julian Hanna said "The Dunlop
agreement is an exciting new development for the Company. The Lynn Lake nickel
camp is a major mineralised system with multiple ore shoots along several
kilometers. Significant potential exists on the Dunlop Claims to define
extensions to known deposits, test existing EM anomalies and discover new high
grade deposits of the EL Mine "type".
Western Areas will initially focus on three target areas at Lynn Lake:
1. Potential extensions to the EL Mine
2. Untested airborne EM anomalies 500m north of the EL Mine
3. High grade zinc deposits of the VMS type at McBride Lake
Western Areas plans to use modern exploration techniques including high
resolution ground and down hole electromagnetics ("EM") and extensive diamond
drilling programs. These techniques have been used very successfully to define
high grade nickel sulphide deposits at the Company's flagship Flying Fox
nickel mine in Western Australia.
The agreement was negotiated by Western Areas offshore Exploration
Manager, Mr Robert Barwick, who will transfer to Canada to manage the
exploration program at Lynn Lake.
EL Mine - Potential Extensions
The pre-mining estimate for the EL deposit was 2.5 million tons @ 2.5%
nickel and 0.9% copper with cobalt values averaging 0.2%. This compares with
recorded production of 1.0 million tons @ 3.3% nickel and 1.1% copper which
suggests significant mineralisation may remain in the mine environment. To
provide an indication of the grades at the EL mine, two early exploration
drill holes in the upper part of the deposit (now mined) intersected 183.0m @
4.8% Ni & 1.7% Cu and 196.0m @ 3.3% Ni & 1.0% Cu.
Mineralisation comprises high grade sulphide breccia in the upper part of
the deposit and disseminated sulphide at depth. Based on widely spaced
drilling below the mine, sulphide mineralisation occurs as a pipe extending to
at least 900m depth in the core of a vertical gabbro intrusion. The Company
believes potential exists to extend the deposit below the mined area.
One of the first priorities will be to review historic drilling and mine
data from the EL deposit and plan a drilling program to test for potential
extensions within this high grade system.
Airborne EM Anomalies - Nickel/Copper and Zinc Targets
The EL Mine is located 1km south of the "A Plug", a 5km long gabbro
intrusion which hosts approximately 15 separate ore lenses which were mined by
Sherritt-Gordon or are included within the Independent Nickel mineral
resources. The Company believes that significant potential remains for
discovering new mineralised pipes in the area of the EL Mine and around the
eastern margin of the A Plug.
One of the most immediate drilling targets is a strong, untested airborne
EM conductor 500m north of EL Mine. Initial work on this target will comprise
ground EM to confirm the anomaly and delineate a diamond drilling program. In
addition there are several high priority EM targets to the east of the A Plug
and in the area of several small VMS zinc/copper targets.
Regional Zinc Targets
The McBride Lake zinc deposit is located approximately 70km east of Lynn
Lake and was partially drilled up until 1991. In 1976 a preliminary estimate
of approximately 2 million tons at an average grade of 8.8% zinc was
calculated to a vertical depth of 375m.
The geology of McBride Lake is consistent with a VMS deposit and is open
at depth and along strike. The defined zinc mineralisation represents only a
250m strike length of an approximately 2km long Turam EM anomaly completed in
1970 (MGS - A.F. 94150).
Although Western Areas main focus is on nickel sulphide deposits, McBride
Lake is clearly a high priority target. Work planned includes high resolution
surface geophysics followed by a diamond drilling program to test for
potential extensions at depth and north along strike.
The Lynn Lake claims also cover several small, zinc rich VMS type base
metal deposits. These remain only partly explored and include:
1. Z deposit - 217,680 tons @ 2.4% Zn & 1.3% Cu, with significant Au
2. FL Deposit - 450,000 tons @ 2.2% Zn & 0.9% Cu, with significant Au
3. Y deposit - 167,400 tons @ 4.5% Zn, 0.2% Cu.
Main Terms of the Agreement:
The agreement is with Canadian-based prospector Peter Dunlop (the
"Vendor") who holds 19 mining claims in the Lynn Lake area and 7 claims in the
McBride Lake area (the "Claims").
- Western Areas has paid C$100,000 to the Vendor for an initial 6 month
option period to conduct due diligence and preliminary exploration
programs on the Claims.
- Western Areas can extend the option period for an additional 6 month
period by payment of an additional C$200,000 to the Vendor.
- Western Areas can exercise the option and acquire 100% interest in
the claims by payment of C$2.0 million to the Vendor and
C$3.0 million exploration expenditure.
- A NSR royalty on future production is payable to the Vendor. Western
Areas has the option to reduce the NSR by future payments to the
SOURCES AND ESTIMATES STATED IN THIS PRESS RELEASE ARE HISTORICAL
IN NATURE WHICH WERE CALCULATED PRIOR TO THE IMPLEMENATION OF CANADIAN
NATIONAL INSTRUMENT 43-101. WESTERN AREAS NL IS NOT TREATING THESE ESTIMATES
AS CURRENT MINERAL RE
SOURCES AND THESE ESTIMATES SHOULD NOT BE RELIED UPON.
ALL DRILLING AND GEOPHYSICAL DATA RELATING TO LYNN LAKE AND McBRIDE LAKE
USED IN THIS RELEASE IS
SOURCED FROM THE "ASSESSMENT AND MINERAL DISPOSITION
HISTORY" SECTION OF THE MANITOBA GEOLOGICAL SURVEY ("MGS").
About Western Areas
Western Areas is an Australian based nickel sulphide producer. The
company has a market capitalisation of approximately A$650M and is listed on
both the Australian and Toronto Stock Exchanges. (ASX & TSX code: WSA).
Western Areas has offices in Perth and Toronto.
The company's core asset is the 100% owned, 90km long Forrestania Nickel
Project, located 400km east of Perth, Western Australia. The primary
discovery, Flying Fox, is one of the highest grade nickel mines in the world.
The current Indicated Mineral Resource is 1.2M tonnes at 6.4% Ni containing
approximately 77,600 tonnes nickel and the Inferred Mineral Resource is 0.2Mt
at 6.8% nickel containing 12,900 tonnes nickel. Underground production from
the first of a number of high grade deposits at Flying Fox commenced in
A pre-feasibility study is well advanced to bring a second mine into
production at Diggers South, 40km south of Flying Fox. Diggers South has the
potential to add approximately 5,000 tonnes of nickel in concentrate per annum
to overlap Flying Fox production which is anticipated will ramp up to 10,000
to 12,000 tonnes of nickel in concentrate per annum.
Exploration is a top priority for Western Areas with many high priority
targets yet to be tested along strike from Flying Fox and along the eastern
nickel belt at Forrestania which hosts the large Diggers South deposit and the
Cosmic Boy Mine previously mined by Outokumpu. Western Areas spends an average
of A$1.5 million per month on drilling and geophysics.
The Company is rapidly expanding its nickel interests in Canada with the
recent acquisition of 13.9% interest of Canadian listed nickel company Mustang
Mineral Corp. Western Areas has an option to increase this interest to 19.9%.
Mustang is conducting a pre-feasibility study for an open pit mine at the
Maskwa nickel deposit, located 150km east of Winnipeg in Manitoba.
The information within this report as it relates to exploration results
is based on information compiled by Mr Robert Barwick and Mr Julian Hanna who
are members of AusIMM and are full time employees of the Company. Mr Barwick
and Mr Hanna have sufficient experience which is relevant to the style of
mineralization and type of deposit under consideration and to the activity
which they are undertaking to qualify as Competent Persons as defined in the
2004 Edition of the 'Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves.' Mr Barwick and Mr Hanna consent to the
inclusion in the report of the matters based on their information in the form
and context in which it appears.
FORWARD LOOKING STATEMENT: This release contains certain forward-looking
statements. These forward-looking statements are subject to a variety of risks
and uncertainties beyond the Company's ability to control or predict which
could cause actual events or results to differ materially from those
anticipated in such forward-looking statements.
This announcement does not include reference to all available information
on the Company or the Lynn Lake Project or the Forrestania Nickel Project and
should not be used in isolation as a basis to invest in Western Areas. Any
potential investors should refer to Western Area's other public releases and
statutory reports and consult their professional advisers before considering
investing in the Company.
For further information:
For further information: Julian Hanna, Managing Director, Western Areas
NL, Telephone +61 8 9486 7855, Email: firstname.lastname@example.org; Craig
Oliver, CFO, Western Areas NL, Telephone +61 8 9486 7855, Email:
email@example.com; Ann Nahajski, Investor Relations, Porter Novelli,
Telephone +61 8 9386 1233, Email: firstname.lastname@example.org, Or visit: